Japan's jobless rate fell in July and firms sought more workers, a sign that domestic demand remains firm, although household spending fell for the seventh straight month on cool, wet weather, data showed on Tuesday.
Japan's seasonally adjusted unemployment rate fell to 4.1 percent in July compared with 4.2 percent in June and an eight-year low of 4.0 percent in May, the Ministry of Internal Affairs and Communications said.
As a sign of growing job opportunities helped by high corporate profits, the jobs-to-applicants ratio climbed to 1.09 - the highest since June 1992, meaning there were 109 jobs available per 100 job seekers. It was at 1.08 in June.
The jobs data was in line with market expectations.
"(The jobs data) shows a continued improvement in labour demand and continued tightening in the labour market so I think it reflects a steady revival in the domestic economy," said Richard Jerram, chief economist at Macquarie Securities.
Japan's jobless rate has been falling over the past few years since it last hit a record-high 5.5 percent in April 2003.
Overall household spending fell 1.3 percent in July from a year earlier due to unstable weather, marking the seventh straight month of year-on-year decline. Economists had forecast a 0.8 percent year-on-year decline. Spending on items such as fresh vegetables fell as rainy weather pushed up their prices and people spent less on travel and other leisure activities amid the cool weather.
But spending was up on cars and household durables such as air conditioners and washing machines.
The average household spent 292,328 yen ($2,494) in July.
"The household spending data was a bit of a surprise, with spending not rising despite gains in income," said Takuji Aida, chief economist at Barclays Capital in Tokyo. But he added, "As long as wages are rising, personal consumption should be supported."
Wage earner households' real average income marked the first year-on-year increase in 13 months thanks to mid-year bonuses.
But the propensity-to-consume index, which measures the proportion of disposable income that households spend, fell to a seasonally adjusted 68.5 in July, the lowest level under the current calculation method that began in January 2000.
The index stood at 76.2 in June.
Market reaction to the data was subdued.
Economists expect employment to grow as companies complete painful restructuring and hire more workers. "Corporate Japan is still trying to expand its operations and you see that in the investment numbers, and I think that is consistent with the attempt to increase the number of employees," said Macquarie's Jerram.
The number of employed increased for the 15th straight month on a year-on-year basis, while the number of unemployed declined for the eighth straight month, a ministry official told reporters.
Japan's economy has been enjoying a healthy recovery, supported by domestic demand. In the April-June quarter, the world's second largest economy grew an annualised 0.8 percent.
The household spending data has been criticised for insufficient samples that cover many government employees, who generally earn and spend less.
While that number has been falling, the private consumption component of gross domestic product data for April-June released earlier this month rose more than expected despite the rainy weather.
Against this background, economists generally say the underlying trend in consumption remains firm thanks to growing employment and rising incomes.
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